Dyna-Mac Holdings boosts share capital by 10%

A new project may be brewing up.

According to OCBC, Dyna-Mac Holdings Ltd (DMHL) recently completed a placement of up to 139.5m ordinary shares, consisting of 93m new shares issued and 46.5m vendor shares owned by current CEO Mr. Desmond Lim, at S$0.50 per share.

Here's more from OCBC:

This enlarges DMHL’s existing share capital by about 10%. Mr. Desmond Lim is still the largest shareholder with a 40.8% stake (previously: 49.9%), followed by Keppel Corp with 24.4% (previously: 26.9%).

According to the group, net proceeds of S$45.7m from the issuance of new shares will be used for working capital purposes.

We believe that the new proceeds will be used to fund working capital requirements for its expanded production output. Recall that DMHL has been operating at close to full utilization in the past quarter and recently expanded its production output capacity to 45,000 tons, up from 25,000 tons a year ago.

With the sharp increase in output, the group is likely to need additional financing for its fabrication contracts.

We are also not overly concerned about the placement of vendor shares. DMHL founder and current CEO Mr Desmond Lim, 54, may have legitimate reasons to diversify his personal wealth. In any case, he remains the largest shareholder with 40.8% stake post- placement and is still very much involved in running the business.